OIL PRICES: Hurricane Has Forced Workers to Leave Gulf of Mexico Platforms
By Jim Landers, The Dallas Morning News
Aug. 21–WASHINGTON — Hurricane Dean looks like it will miss the oilfields off the Texas coast, but it’s making a beeline for two-thirds of Mexico’s oil production — the source of more than one in 10 barrels of U.S. oil imports.
Petroleos Mexicanos, the national oil company, evacuated more than 18,000 offshore oil workers from Gulf of Mexico facilities Monday and said it would pull out an additional 1,037 who were shutting down and securing offshore oil installations.
A weakened Dean was expected to start battering Mexico’s drilling rigs and platforms by late today with winds up to 95 miles an hour and 22-foot waves, Pemex said in its emergency declaration.
Mexico’s offshore fields produce 2.65 million barrels of oil a day and 2.63 billion cubic feet of gas.
Oil prices declined 86 cents to $71.12, as it became apparent that the full strength of Hurricane Dean would miss U.S. offshore production, which was badly disrupted two years ago by Hurricanes Katrina and Rita.
U.S. refineries still haven’t recovered completely from those storms. In addition, refiners have struggled with maintenance and accident issues this year, pushing up summer gasoline prices.
But oil analysts said Dean’s impact on prices would only be apparent once the storm clears the Gulf of Campeche.
“Pemex, for the last 25 years, has been the world’s largest offshore oil producer,” said Houston consultant George Baker, who follows Mexican energy at energia .com. “You don’t have that rank in a hurricane area without learning a good deal about how a hurricane works.”
Hurricane Dean may ravage the Yucatan with fierce winds and buckets of rain, but the resort-dotted peninsula was expected to shield Mexico’s oil fields from the worst effects of the storm. Hurricanes weaken over land, and Dean was expected to climb back only to a Category 3 storm as it rakes the Gulf of Campeche.
“If the storm does minimal or no damage to platforms, refineries and pipelines, then we’re probably talking about a disruption that lasts a matter of a few days,” said Doug MacIntyre, a senior oil market analyst with the U.S. Energy Information Administration.
“The key, though, is how much damage is done,” Mr. MacIntyre said. “Mexico is an important source of crude oil for us. If production or exports are offline for a significant period of time, that is going to have an impact here in the U.S. as well as globally.”
Mexico supplies the U.S. with about 1.4 million barrels a day. Total U.S. imports are running at about 10 million barrels a day.
Mr. Baker said Mexico’s offshore operations account for between 75 percent and 85 percent of its oil production.
Mexico’s biggest oil field, the Cantarell, is about 80 miles off the coast of Tabasco. Production from the Cantarell peaked in 2004. Mexico has since shifted its enhanced oil recovery efforts to another giant complex, the Ku-Maloob-Zaap (KMZ) fields farther out in the bay. Both complexes are in the storm’s projected path.
“Everyone is most concerned about gulf hurricanes after the experiences a couple of years ago,” said David Pumphrey, an energy analyst at the Washington-based Center for Strategic and International Studies. “This market is tight enough that this could have an impact as well.”
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